Brazilian Privatization in International Perspective : The Rocky Path from State Capitalism to Regulatory Capitalism

This paper describes the history, size and scope of the public enterprise sector in Brazil, using a variety of indicators and drawing from different interpretative sources. It shows that at least until the 1970s, state-owned enterprises contributed to the industrialization process and to fiscal results. The paper sets out the political and institutional framework in which privatizations are implemented, compares its main features with those prevailing in some other countries, and provides an updated account of state sell-offs. The consequences of privatization in terms of corporate governance are analyzed. In Brazil, the private sector has been negatively affected by the post-1991 opening of the economy, which has also coincided with generational transition in most family-owned groups. Domestic financial institutions have partly filled the void left after the state retrenchment, but the parallel strengthening of market mechanisms in the allocation of financial resources has trailed behind, posing major policy issues